This has been a busy week for economic news; I thought I would give an update for the week:
- 2002Q4 GDP growth revised up to 1.4% annual rate (from a previously estimated 0.7%). Better, but not great.
- Hubbard out, Mankiw in at the CEA. His nomination shouldn’t have been controversial – he is an accomplished and respected academic macroeconomist (and a fellow MIT PhD), but some right-wing supply-side economists are unhappy about what he wrote in his Principles book about Reagan’s policies.
- Oil Prices are hitting 12-year highs and getting close to 40$ a barrel.
- Consumer prices rose 0.3% in January and wholesale prices (the PPI) jumped 1.6%. The increases were due in part because of rising energy prices. The core CPI and PPI (which exclude food and energy) increased by 0.1% and 0.9%, respectively. If the PPI increases continue and make their way to consumer prices, it will cause the Fed to think twice before reducing interest rates in the case of a “double dip” recession. On the bright side, the increases should lessen deflation fears.
- Consumer confidence fell to 9-year lows. The link between the Conference Boards’ index and spending is weak, so we shouldn’t be too worried; however, if consumer spending fails to hold up, expect a second recession.
- On the bright side, it was announced that durable goods orders jumped 3.3% in January.